First Affiliated Reinsurance Company Formed in Vermont

State of Vermont colored in solid blue with the Vermont seal in the middle of the state on a black background

January 24, 2019

State of Vermont colored in solid blue with the Vermont seal in the middle of the state on a black background

Less than a year after Vermont passed legislation establishing a new type of captive structure, the state licensed its first affiliated reinsurance company, MAPFRE RE Vermont Corporation, formed by MAPFRE RE, a global reinsurer based in Madrid, Spain, which conducts business in more than 100 countries.

In the spring of 2018, Vermont passed a law offering a more favorable reinsurance alternative for US companies currently reinsuring with affiliates outside of the United States that may now be subject to the Base Erosion and Anti-Abuse Tax (BEAT) included in the Tax Cuts and Jobs Act of 2017.

David Provost, deputy commissioner of captive insurance, said, "[affiliated reinsurance] companies are akin to a hybrid between captives and traditional insurance. Like captives, they [are] limited to reinsurance of affiliates, but they [are] regulated in accordance with [National Association of Insurance Commissioners] NAIC accreditation standards like a commercial reinsurer."

"The experience, consistency, and responsiveness of Vermont's regulatory regime helped to make this a very straightforward process," said MAPFRE RE CEO Eduardo Pérez de Lema.

"The industry approached us with a need for a US alternative," said Mr. Provost. "It's something we've been considering for some time, but the imposition of BEAT taxes on reinsurance between US and foreign affiliates made the timing critical."

January 24, 2019